Boo.com – A Lesson In Business

Boo.com was founded in the late 1990s when dot com mania was gathering pace and venture capitalists had open cheque books but little time for lessons that had stood the test of time.

The internet was new, e-commerce was sexy and missing the boat was not on the agenda. This was the New Age.

Boo.com was the brainchild of long-time friends, Ernst Malmsten and Kajsa Leander. It was to be the flagship web site for the new world of internet retailing. Selling branded fashion & lesiure clothing to a generation of people becoming addicted to this new world. The Urban Cool.

Forget ‘bricks & mortar’ – cyberspace was hip. Get on board or get left behind.

Unfortunately, the hype & the glitz was just that. Within 18 months, Boo.com would become a byword for commercial stupidity.

Rules and conventions that have stood the test of time in the real world were ignored.

Boo.com was more about ‘hey look at us, aren’t we clever’ than straightforward commercial reality. Techonology or more especially, the internet, was the new kid on the block & the old ways were just that….old.

Lesson One – Build It & They Will Come:

When the Boo.com website launched after many delays, criticism was immediate. It’s all very well setting new standards in design and function but if the majority of your target customers can’t use the site, you’ve got problems.

The site relied heavily on Javascript & Flash which may be commonplace now, but in 1999/ 2000 they were niche. Miss Boo, the sales assistant avatar, who relied on these technologies was definitely not user friendly.

The site itself was so hungry for bandwidth that for most people, still using 28k and 56k dial-up modems, the homepage took a lifetime to load. Even in the late 1990s making customers wait an age to see the online catalogue was bad news. People were more patient then with slow downloads than they are now, but Boo were just taking the … (fill in your own word here).

Lesson Two – Our Designer Says Its Hip:

Even if the target customer is willing to wait an age to get through the front door, when they come in they must be able to find what they’re looking for. You’ve spent all that money bringing them into the store, don’t disappoint them.

Boo.com didn’t make life easy. Boo.com wanted to be at the cutting edge of web development but forgot it wasn’t a new age design agency, it was a retailer who was meant to make its money selling clothing. Navigation around the site was inconsistent. Using a fixed window size limited the space to display products. Asking lots of questions about what the customer wants, then informing them that ’sorry we have nothing in stock that matches your requirements’ is well just … daft.

Press coverage may have brought many visitors but the site dynamics quickly turned them away.

Lesson Three – Stick With The Original

For all the design and development mistakes, Boo.com did have it just about right at one stage. The beginning.

In early 1999, an unreleased site was ready that had been created by Boo’s orginal technology partners. The design was good – sleek, simple, a balance between bandwidth and customers. Miss Boo was there but download times were within the realms of acceptability.

But the in-house team were flexing their muscles and wanted to show their own talent. The external contractors were dumped, the launch date put back and some months later the new ‘grand design’ was triumphantly launched.

This was the new grand design that left its customers baffled, confused, frustrated, irritated. Not the reactions that the Marketing & PR team had confidently forecast.

Lesson Four: Top Dollar Does Not Mean Top Dog

As well as creating the most advanced web site on the planet, Boo.com was also intent on creating the most overpaid & over indulged workforce on the planet. It’s one thing to look after your staff, to make them feel good & enjoy coming to work but someone has to pay for all the fuzziness.

Some contractors were being paid $200 an hour. Poor communication between departments allowed costs to spiral, an expensive ad campaign was mis-timed (the site was still not ready – visitors were greeted with a holding page) and when the business did go live, high product returns on a free postage basis (free to the customer that is, Deutsche Post still charged Boo) added to the mounting cash burn.

Boo burnt $120m in development, launch and during its brief life.

If Boo.com had an accountant, they certainly came from a different finishing school to the one that most companies are familiar with.

Staff and contractors were recruited in large numbers yet were giving very little direction or accountability. Decision making was poor and leadership at times non-existent.

Companies like Amazon and Ebay may have been spending a lot of $ but they had real sales, real growth and real potential. Boo had none.

Lesson Five – Start With The Basics

Boo failed for many reasons but uppermost was a failure to understand its customers and the basics of retail. Failure of management. A widely circulated article by Tristan Loius confirms this view:

http://tnl.net/blog/2000/05/19/boocom-goes-bust/

A business is still a business whether its online or off. Commercial realities affect all businesses. Boo thought it could ignore the basics and still be a global success.

Sadly not.

So where is Boo now?

Well as we identified right at the start, Boo is on its way back!

The domain name though is owned by a different company and the cutting edge software was bought by Bright Station. I hope that the New Boo has learnt the lessons and will be focus on being a real business.

In the third part of this blog, I’ll briefly look back at T2G and see if there are any comparisons with Boo. There were a lot less $ floating around but the lessons from Boo I’m sure will resonate at least in part with our own experience.

Lock up your wallets – Boo.com is coming back!

For every success story in business there are probably at least a dozen failures (don’t quote me on this stat – just follow the line of thinking). Most failures go unnoticed except by the authorities and the people that the failed business owes money to.

Very few fail so spectactularly, so publicly that they become a byword for all that can go wrong in business.

Sometimes a good business will turn bad because of one moment of poor judgement as in the case of Ratners.

At a speech in 1991, the then CEO Gerald Ratner made the following comment & within days had wiped off £500m from the value of the family business.

“We also do cut-glass sherry decanters complete with six glasses on a silver-plated tray that your butler can serve you drinks on, all for £4.95. People say, “How can you sell this for such a low price?” I say, because it’s total crap.”

This was compounded later in the same evening when Ratner later remarked that

some of the earrings were “cheaper than an M&S (UK food retailer) prawn sandwich but probably wouldn’t last as long”

Ratners although considered ‘tacky’ had over many generations built a very successful business selling low cost jewellery. Branding and image had been successfully used to overcome the quality deficiences of the product. Unfortunately, the media had other ideas and seized on the story.

Within 18 months Ratner was gone. Within 3 years so was the family name. ‘Doing a Ratner‘ was a part of the British vocabularly. The name would always be associated with spectacular falls.  In his defence, Gerald Ratner has always said that it was a private function which he did not expect to be reported, and his remarks were not made seriously.

Is there a connection with Boo?

Yes and no. Comparison and contrast. Ratners had been successful over many years and only the power of the British media brought the long established business to its knees.

With Boo (and yes, with hindsight) the writing was on the wall from Day One. Boo was never successful, even for just one day. But it’s 15 minutes of infamy will live forever.

Launched in early 1999, Boo burnt its way through nearly $120m before being forcibly closed down in May 2000. Within just 18 months, one of the most hyped dot com businesses had entered folklore as the 6th greatest dot com disaster according to CNET.

So how could a business get it so wrong, so quickly?

…. the answer is in tomorrow’s blog!